Publishers Clearing House, the largest sweepstakes promoter, is betting a new Web site will help reverse its ill fortunes, weeks after laying off a quarter of its 800-person work force in the wake of plummeting business.

PCH cleans house, goes virtual in profit play

By: LIBN Staff February 18, 2000Comments Off on PCH cleans house, goes virtual in profit play

Port Washington — Publishers Clearing House, the largest sweepstakes promoter, is betting a new Web site will help reverse its ill fortunes, weeks after laying off a quarter of its 800-person work force in the wake of plummeting business.

PCH’s magazine and merchandise sales last year plummeted at least 30 percent amid bad publicity from lawsuits now numbering 25 in which individuals and attorneys general – including New York’s — alleged that it deceived consumers in its frequent mailings. That led to "over 215" layoffs last month, said Chris Irving, PCH’s director of consumer affairs.

The layoffs, while apparently costing several million dollars in severance payments, also cut PCH’s payroll by at least $6 million. "The company was generous with employees," Irving said. "The high cost of litigation and publicity really did cause those unfortunate employee terminations. It was a difficult decision to downsize."

The layoffs were equally split between PCH’s main facility in Port Washington and in Syosset, where the mail is processed, and involved workers and management, Irving said. PCH is among Long Island’s biggest privately held firms, with $345 million in 1997 revenues, a number that has shrunk to an undisclosed amount.

PCH has taken steps to counteract the business decline, but doesn’t plan to rehire anytime soon, Irving said. The company revamped its Web site in January, and Irving said it’s among the 15 most-visited sites in the country, receiving hundreds of thousands of hits per day.

The company is promoting the Web site on network and cable television, through its mailings and with the publicity surrounding its $21 million Super Bowl payout last month. Irving said PCH hasn’t calculated yet whether those Web site visits translated into big sales, but "in the next couple of years it will be a major player in terms of subscription acquisitions," said Pete Pedersen, PCH’s executive director of publisher relations.

For now, PCH is concentrating on settling the lawsuits. Irving said negotiations with attorneys general and lawyers behind a class action lawsuit are under way and the company hopes to resolve them this year. "I truly think that’s going to happen, not in the next 30 days, but not a couple of years down the line either," Pedersen said.